Why are too many revenue streams a red flag for investors? It signals you're unfocused and unsure of your core business.

🧚🏻‍♀️ Investors in early-stage startups prefer simplicity. A complex pricing structure can confuse customers right from the start. Ideally, you should have one primary revenue stream, possibly supplemented by one more, but having over three is a red flag. Here’s why:

🌚 Lack of focus. Multiple revenue streams suggest you haven’t really decided on your main source of income. This lack of focus usually leads investors to think you have a poor understanding of your pricing and don’t have good enough competitor research.

☄️ Execution challenges. Managing multiple revenue streams is tough. For example, if you plan to run a SaaS business but also want to rely on ad revenue, you need a team to handle advertisers. Adding a marketplace on top of this requires separate product development. Each stream requires attention, which can cut resources and dilute efforts.

🫧 Investor concerns. Investors want to see a clear, concise business model. Multiple streams can make your pitch convoluted and hard to follow. It can also indicate that you haven't thought through your strategy deeply enough.

🥁 Keeping it coherent. If you do have multiple revenue streams, ensure they complement each other. For instance, a SaaS product with an additional usage fee (like per seat or additional tokens) can work because they are related and scalable. This coherence is key to maintaining clarity and focus.